BOC: TD No Longer Sees July Cut, Raises Terminal Rate 25bp
Jul-11 13:56
TD Securities no longer sees a July BOC cut, following today's much stronger than expected labour data for June. We would not be surprised to see other analysts do the same after next Tuesday's inflation data, assuming no major surprises vs expectations.
- TD still expects further cuts but has lifted the expectation for the terminal rate by 25bps to 2.25%, seeing rate cuts in September and October.
- TD writes: "We have been overwhelmingly focused on the CPI data ahead of the July BoC meeting, with the caveat that we would need to see an extraordinary surprise on jobs to really change the calculus for the Bank. Ask and ye shall receive, I suppose. As always, we are wary about putting too much weight on a single jobs print, but the magnitude of the surprise is large enough for the Bank of Canada to argue that there is too much uncertainty around the underlying state of the economy to justify cutting rates this month - particular with core CPI inflation still around 3.0%. There still exists a level of CPI that is soft enough to push the Bank into rate cuts even with this labour market data (we'd remind everyone that the last industry level GDP report suggested negative activity in both April and May), and we could see yet another change in US trade policy that is obviously and immediately damaging for Canada, but the odds of cut this month have now fallen decisively below 50%. Hence, we now look for a July hold."
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MNI EXCLUSIVE: Chinese Policy Advisors Give View on Likelihood of Trade Deal
Jun-11 13:56
- Chinese policy advisors give their view of the likelihood of a trade deal with the U.S. -- On MNI Policy MainWire now, for more details please contact sales@marketnews.com
EQUITY TECHS: E-MINI S&P: (M5) Uptrend Remains Intact
Jun-11 13:53
- RES 4: 6172.38 1.500 proj of the Apr 7 - 10 - 21 price swing
- RES 3: 6124.00 High Feb 24
- RES 2: 6080.75 High Feb 26
- RES 1: 6074.75 Intraday high
- PRICE: 6028.75 @ 07:25 BST Jun 11
- SUP 1: 5910.19/5808.04 20- and 50-day EMA values
- SUP 2: 5756.50 Low May 23
- SUP 3: 5596.00 Low May 7
- SUP 4: 5455.50 Low Apr 30
The trend condition in S&P E-Minis remains bullish and the contract has again traded to a fresh cycle high, today. The recent break of 5993.50, the May 20 high and a bull trigger, highlights a resumption of the uptrend and maintains a price sequence of higher highs and higher lows. Sights are on 6080.75 next, the Feb 26 high. Key support to watch lies at 5808.04, the 50-day EMA.
US DATA: CPI Dispersion Metrics Point To Only Mild Uptick For Core Goods
Jun-11 13:49
- Taking a step back, dispersion metrics of CPI inflation saw a mild uptick with 33% of ~190 items in the overall basket growing in excess of 3% Y/Y vs 29% in April.
- It’s the highest since February and before that May 2024, with the share having bottomed out at 28% in December. For context, it averaged 24% in 2019 or 19% in 2015-19.
- The same analysis for core goods saw the >3% Y/Y share rise from 14% to 19% in May for its highest since Feb and before that Apr 2024. As noted in the details, whilst there were multiple large increases in M/M rates for some specific items, there were also some surprisingly weak readings elsewhere.
- Further, whilst the latest level is above the 12% averaged in 2015-19, it’s only back to the 18.5% seen just in 2019, having peaked at 75% in 2022.
- The share of core services items growing >3% Y/Y largely consolidated an impressive recent drop, only rising 1pp to 51% having been at 63% in February. However, it averaged 38% in 2019 or 34% in 2015-19.
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